NEW YORK, Feb 19 (Reuters) - Oil prices rose on Tuesday as
traders grew bullish amid a rally in U.S. stock markets, even as
U.S. pipeline bottlenecks and European economic concerns
threatened to weigh on oil markets.

U.S. crude for March delivery rose 80 cents to settle
at $96.66 a barrel. The March contract expires on Wednesday.

The S&P 500 stock index rose by about 0.6 percent on
Tuesday. U.S. equities indices are hovering near five-year highs
on prospects for quicker economic recovery, healthy U.S.
corporate earnings and a spate of large corporate mergers.

"Oil traders see the rise in equities and decide to buy
oil too," said Tim Evans, analyst at Citi Futures in New York.
"Some might expect more oil demand driven by the equities rally.
But it's likely a correlated trade flow that isn't based on oil
market analysis."

U.S. oil futures rose even as the operators of the 400,000
barrel per day Seaway Pipeline from their Oklahoma delivery
point to southern Texas said the line would not be able to reach
full capacity in the "foreseeable future," potentially leading
to surplus crude in the U.S. Midwest.

Brent for April rose 14 cents to $117.52 a barrel,
tracking U.S. futures higher in afternoon trade, after earlier
falling by more than 80 cents a barrel on European economic
concerns.

"The concerns about Europe's economy have weighed on crude
oil," said Phil Flynn, an analyst at Price Futures Group in
Chicago.

Expectations that economic growth in France will miss the
government's 2013 target and caution about Italy's election
added to investor uncertainty about the outlook for the euro
zone and weighed on crude prices on Tuesday.

Brent fell By as much as 83 cents a barrel earlier on
Tuesday.

Brent speculators reduced their net long positions from a
record high in the week to Feb. 12.

"The (Brent) price currently appears to have reached a
ceiling of $118 per barrel, which could prompt
short-term-oriented market players to abandon their long
positions," Carsten Fritsch, a senior oil analyst at Commerzbank
in Frankfurt, said.

U.S. March heating oil fell 1 percent, with March
gasoline futures also slipping on Tuesday.

U.S. oil products fell in spite of news that the 600,000
barrel per day Motiva Enterprises refinery in Port Arthur,
Texas, shut its gasoline-producing fluidic catalytic cracking
unit on Monday night following a malfunction, according to
sources familiar with the plant's operations.

SEAWAY CRUDE OIL PIPELINE

Crude oil throughput on the expanded Seaway Pipeline will
continue well below nominal capacity due to the mix of heavy and
light crude being transported, according to a company filing
with federal regulators.

The flow on the pipeline, owned by Enterprise Product
Partners and Enbridge Energy Partners LP, was
reversed last year to move crude south from the U.S. Midwest,
where production has soared, to refineries on the Gulf Coast.

Seaway, recently expanded to a capacity of 400,000 barrels
per day, should average 295,000 bpd between February and the end
of May and was not expected to see flows above 335,000 bpd in
"the foreseeable future," according to the filing made to the
U.S. Federal Energy Regulatory Commission.

"This is bearish for U.S. oil futures," said Evans.

U.S. futures rose in spite of the Seaway note, helping to
narrow Brent's premium to U.S. futures CL-LCO1=R, although it
remained above $20 a barrel.

Investors are keeping a close eye on nuclear talks between
major powers and Iran set for next week. Sanctions on
OPEC-member Iran have reduced its oil exports and could have
fallen below 1 million bpd in January, according to estimates
from the International Energy Agency (IEA).
(Additional reporting by Robert Gibbons in New York,
Christopher Johnson and Emma Farge in London and Florence Tan in
Singapore; Editing by Marguerita Choy and David Gregorio)